Financial Aid Guide

The US Dept of Education awards $150 billion per year in grants, work-study, and low-interest student loans. Federal student aid covers expenses such as tuition and fees, room and board, textbooks, and related school supplies. Each student's financial need is re-assessed yearly, and the financial aid award may be re-adjusted. Surprisingly, first-tier colleges and universities tend to offer the greatest savings for students, due to their enormous endowments.

To begin the search for financial aid, you'll need to fill out the FAFSA form, the federal student aid application. Please note that financial aid deadlines are strict, so be certain to submit your scholarship and loan applications early for the best chances of obtaining all available financial aid. It's a fact that literally millions of students that would have qualified for some financial aid didn't even apply for it, or perhaps were late submitting required forms. The official FAFSA website is fafsa.ed.gov. Other websites imitate the FAFSA site, but are deliberately misleading, and may charge fees, as well as sell your personal data online to marketing agencies. Further, each college and university has its own formula for determining levels of financial need, so parents must keep financial records for at least three years, including tax forms and any business records. The earliest that the FAFSA form can be filled out is January of the senior year in high school. In contrast, the CSS Profile can be filled out much earlier, as soon as the start of fall term.

Many parents make errors when filling out the FAFSA, including forgetting to click the 'submit' button when finished, leaving out some fields instead of entering a zero, or incorrectly copying their social security number. Estimated tax data can be used to fill out the FAFSA, provided the information is updated later, when taxes are actually filed. Various financial aid calculators are listed below, to help you determine financial aid eligibility, and loan repayment schedules.

Financial Aid Loan Calculators

The following calculators will assist you in computing various financial aid metrics.

Be aware of the different tuition and fees charged for in-state versus out-of-state residents, and the documentation required that may enable reclassification as an in-state student after the first year of study.

Federal Grants

A Federal Pell Grant, unlike student loans, does not have to be repaid. Pell Grants usually are awarded only to undergraduate students who have never earned a bachelors or professional degree in the past. Award amounts change yearly, and the grant distribution will depend on demonstrated financial need, according to FAFSA guidelines, the cost of attendance, and your status as a full-time or part-time student. Please be aware that you may not receive Federal Pell Grants from any more than one educational institution at a time.

Students who receive Federal Pell Grants and have extreme financial need may receive FSEOG grants. The FSEOG grant does not need to be repaid, and the FSEOG program is administered directly by each college or university in-house. Check with your school's financial aid office to find out if they offer the FSEOG grant program. You can receive anywhere between $100 and $4,000 a year, depending on when you apply, the amount of other financial aid you get, and the availability of grant funding. Each participating school receives a certain amount of FSEOG funds each year from the Office of Federal Student Aid. Once the full amount of the school’s FSEOG funds has been awarded to students, no more FSEOG awards can be made for that academic year. This system works differently from the Federal Pell Grant Program, which provides funding to eligible students.

Guaranteed Student Loans

Before you jump in and get an easily-approved student loan, saddling yourself with a large amount of debt after graduation, use the following loan calculators to determine repayment options. You should also investigate issues such as loan forgiveness limits, and default ramifications. Need-based loans originate from a variety of sources, and are not limited to Federal Government loan programs. Short-term loans may bridge the gap between the opening of classes, and subsequent financial aid disbursement dates. Be aware that there are variable interest rates, and penalties to pay if you lag behind on loan repayment.

Federal Direct Student Loans, also known as Direct Loans or FDLP loans, are funded from the Treasury, while private student loans are not guaranteed, and offered directly by participating banks, credit unions, and finance companies. When Federal student loans enter the repayment period, a borrower usually has up to 10 years to repay the total amount, and while federal student loans can be dismissed on the basis of permanent disability, private student loans typically can't be discharged outside of bankruptcy proceedings. The best financial aid plan is to aggressively pursue scholarships, and grant funding where available, combined with personal savings.

Private loan programs issue loans based on the credit history of the applicant and any co-signers. This contrasts with federal loans which focus on need-based criteria that is specified in the FAFSA. Moreover, private student loans have variable interest rates whereas federal loans generally have fixed rates. Loan applicants must be aware that private loans may require a large, up-front origination fee. Origination fees are a one-off charge based on the total amount of the loan. Private loans are therefore higher-cost than federal student loans, and are to be used only when students have exhausted borrowing limits under federal loan programs. Many private loans are pegged to a monetary index, such as the Wall Street Journal Prime rate, or the BBA LIBOR rate, plus an overhead charge if applicable.

Low-interest Perkins Loans

Perkins Loans are low-interest, federally-administered student loans targeted towards students who have demonstrated exceptional financial need. The interest rate for Perkins Loans is set at 5%, and actual disbursements are based on your financial need as well as the availability of funds at your college. You may apply for a Perkins Loan if you are enrolled either full-time or part-time, and attending a school that participates in the Federal Perkins Loan Program.

You should submit your FAFSA early to be considered for a Perkins Loan, but due to limited funding, not everyone who qualifies will succeed in getting this low-interest loan. If you are attending school at least half-time, you will be entitled to a grace period of nine months after you graduate, or in the case that you fall below 50% enrollment status, before you loan repayment begins.

College Scholarships

To increase your chances of being awarded a college scholarship, begin searching for programs during your junior year in high school, or at least a year in advance of your intended college application if you've already graduated from high school. There are several free scholarship sites available online. With more than 1.5 million scholarships worth more than $3.5 billion, the FastWeb.com is the largest scholarship-search database. Students often ask if there are any scholarships available for them because they don't have a perfect 4.0 GPA. In fact, there are many scholarships that focus on other qualities besides GPA and class-standing alone.

In general, parents end up paying at least 1/2 to 2/3 of their children's college costs, through a combination of savings plans, current and future income contributions, and guaranteed student loans. Government aid, scholarships, and grants, account for only about 1/3 of the cost of a college education. In this light, it's crucial that parents think about starting a savings plan 10 years before their kids reach high school age.

Another option may be the ROTC program, if you are interested in military service. The Reserve Officers' Training Corps pays for college tuition as well as a stipend, as long as you're attending school. There is no fixed military commitment for the first year, allowing you to enroll in ROTC on a trial basis. If you then choose to commit to a military career, ROTC scholarships pay for almost all tuition and fees, and textbook costs, for up to four full years of college.

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